Can streaming music be a sustainable platform for artists? (#midem)

February 1st, 2014 by Stuart Dredge

It’s one of THE big, sensitive, always-likely-to-cause-a-row questions about the modern music industry: can streaming music pay off for artists, not just for music rightsholders, the streaming services and the latter’s investors?

Thom Yorke’s declaration last year that Spotify is “the last desperate fart of a dying corpse” has hung in the air like… well, like a bad smell. So was he right, or can Spotify and its rivals prove their worth to musicians in the coming months and years? The final panel of the first day at Midem tackled the topic, albeit without any actual artists on the stage.

Instead, the panel comprised Axel Dauchez, CEO of Deezer; Eddy Maroun, CEO of Arabic streaming service Anghami; Brian Message, chairman of the Music Managers Forum; Thorsten Schliesche, SVP and general manager Europe at Napster; and Mandar Thakur, COO of Indian firm Times Music.

The moderator was Milana Rabkin, digital media agent at United Talent Agency. After some preliminary chat about devices and partnerships, the panel got into the meat of the question. Well, with the odd swipe at the complexities of licensing streaming music services, of course. For example:

“The music industry itself over the past few years stunted the growth of the streaming services,” said Thakur. “To tell you the truth, if one had to start a streaming service, it’s a nightmare! Some parts of the music industry behave like they’re in a kindergarten. It’s as simple as that!”

Maroun talked about how streaming impacts piracy, suggesting that for Anghami “there is no competition bigger than piracy: we say we are pirating the pirates. I’m sure there is a lot to be done, but we are just starting.”

Schliesche also talked about the way the “product definition” is changing for artists: “We have a new currency, which is play, and everything which generates a play is something that brings the artist revenues. It could be a video showing the artist in the studio. It could be outtakes, it could be live recordings.” Napster, like its streaming rivals, is starting to produce its own content: acoustic sessions, video interviews and the like, to push this.

Over to Brian Message, to give a manager’s view on how streaming works for artists, and what they need to do to make that better. “We find it to be quite liberating,” he said. “It can be very different for a brand new act versus a more established artist.” He talked about sitting down with Nick Cave two years ago, and realising that streaming was a “really useful tool” for the artist, who didn’t want to do much promotion himself.

“We put streaming right at the forefront of everything he did, right the way from developing Spotify apps through we then used lyric cards and all that kind of stuff, in order to drive an awareness campaign without him having to do too much promotion. And that worked very well for us.”

He talked about the notion of building artists’ businesses, with multiple revenue streams and “finding fans around the world where you find them – and streaming for us is a really important front and centre of that, even if it may not be the central monetising thing that it will be when it gets to scale.”

Dauchez talked about how Deezer works, with its editorial team building plans to help artists popular in one country break others too, “helping the artist to reach their audience, and we invest on top of that – paying for some media campaigns on Facebook and on Twitter to push any promotions with artists… if we do that, it’s not only for the benefit of the artist. We believe there is a stake for the whole industry which is not so much discussed, which is where the money is going.”

Such as? “The debate about the horizontal splits of the money between the different artists. If the platform is just a jukebox, people will only listen to the tracks they already know. If we do that, no money will finance the creation of new music,” said Dauchez. “We have a common responsibility to generate discovery: to force people to try new artists, new songs… Investing in new artists is not a marketing tool: it’s an industry need… if 70% of the streams are done in the back catalogue, there will be no new creation.”

Message jumped in: “What’s really important about the streaming opportunity is discovery, and it has to be something that we all collectively need to focus in on. It needs to be intuitive, and it needs to be creative, and it need to be inspirational… That’s the little bit that’s going to create a lot of value in it for fans and consumers. Otherwise it becomes a really low-margin business.”

Will the curators on streaming services ever be compensated? The people creating playlists and turning other people onto new artists and songs? “We talk about it a lot actually,” said Message. “Particularly in the artist world where a lot of people follow artists. I would like to think we might do, but I don’t know when.”

What about YouTube as a competitor for streaming services? Not least because they have a community of curators, some of whom started by illegally posting music on YouTube, but got so big, they now have deals where labels are paying them to promote music (according to Rabkin).

Schliesche said curators are becoming more important in the streaming world, with playlists. “We give a lot of power back to artists and communities, and allow them to act independently from the classic media, and I think that is a very important approach.”

Message talked about the way managers are thinking about fan engagement. “It’s almost becoming an obsession at some level in having this fan engagement,” said Message. “We’re spending a lot of time on the complexities of that multi-level fan engagement, whether that’s working on Facebook, or selling tickets direct, or putting something on YouTube as a trailer.”

A question from the crowd asked about streaming payouts for artists. “I’m getting a little bit tired of this discussion, I keep doing it since a year,” said Schliesche, noting that Napster pays out 70% of its revenues. “This is possibly too much, because we have to invest a lot of money into research and development… this is some kind of intellectual property that is not completely honoured by the musicians, by the music industry, to be honest.”

Both he and Maroun talked of streaming as something that will pay off in the long term for artists. “We and artists are in the same boatL if we succeed, we both succeed, and if we fail, we both fail,” said Maroun. Dauchez also claimed that if iTunes customers – who spend an average of $40 a year – switch to being paid streaming subscribers, they’ll be paying $120 a year. But he warned again that new artists must benefit from any increase in overall revenues, rather than just big, established stars.

Thakur suggested that “artists should first and foremost focus on writing the hits rather than making lots and lots of money“, before Deezer chipped in criticising YouTube as “the most important legal pirate”, and suggesting that artists should be welcoming the move towards audio streaming as an alternative to that.

The panel also talked about transparency and streaming, with Message saying managers are trying to “get beyond the non disclosure agreement” to understand exactly how their digital royalties are being calculated. “It’s a volume game, and it’s going to get bigger and more important. And for everybody in the chain… we have to get to a point where everybody trusts and understands the revenue stream and revenue flow, otherwise we are going to dampen the opportunities that are available to us.”

Another question from the crowd asked about data – how can artists interact with the people who are streaming their music on Spotify, Deezer and other services. “All I have is a country flag on a map,” said the questioner. Will there be more data-sharing by streaming services, in other words?

Dauchez said that Deezer is working on this: “The artist will be able to connect directly through notifications on the mobile or email, or through the system directly, and manage their direct relations with the people who said ‘I am a fan of this artist’. But it’s not as easy as just providing the email address to the guy – we are not allowed to do this – as to provide the channels.”

Schliesche said he’s concerned about the potential for artists to start promoting rival streaming services if they’re given direct access to Napster’s customer list, but he was broadly positive. “If artists do build their own base and would like to promote their own things within the community, they should get access to the community,” he said.

“The good thing at some level for us is you do have some choices, there are a number of ways of doing things,” said Message, praising the rise of ‘label services’ companies, which bring with them better access to data.